NEWS | Wednesday, 04 March 2009

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Labour issued a missive yesterday accusing government of having lost control on the national finances, citing a deficit of €136.5 million in January 2009 – an increase of 117% or €74 million over the same month in 2008.
“In other words, we’re looking at a deficit greater than it was with January, February, March combined in 2008,” said Charles Mangion, Labour’s main spokesperson on finances.
Mangion said the government’s financial situation had been rendered problematic by its recurrent expenditure, which had increased by 25%.
“This is surely higher than the rate of economic growth, and this time the government does not have the excuse of subsidies paid out on the utility bills,” Mangion said.
He said government’s targets last year were to decrease recurrent expenditure in 2009 by €18 million, but expenditure had already increased by €45.5 million.
He also said the servicing of public debt had “exploded” by €4 million or 28% after just one month, when throughout the last year interest payments had totalled some €10 million. Public debt in January increased by 10% to €322.8 million, while since November the debt increased by €61 million.
Mangion added that in the last budget, the government had said one of the reasons its deficit had spiraled in 2008 was due to the €55 million in early retirement schemes it paid out that year, mainly to former workers of the Malta Shipyards.
“Now it is emerging that €17.5 million of that sum was not effectively paid out in 2008 but paid in 2009. This shows an accounting exercise was carried out so that, when the confirmed figures for 2008 are issued, the finance ministry can show it reached its targets for the year. These games are impressing nobody,” Mangion said.
The Labour MP added that EU funds kept decreasing with just €310,000 received in January, compared with the €4.6 million Malta was contributing to the EU budget every month.
“Maybe government was more interested in getting EU funds for the St John’s Co-Cathedral’s quarry during January,” he remarked.
On his part, finance minister Tonio Fenech said government’s main priority was economic stability and job creation. “Government will use all the resources at its disposal to safeguard jobs and attract investment for more jobs.”
Fenech said Mangion’s statement ignored the international financial crisis and betrayed his political opportunism.
“While the Opposition criticises the government for not doing enough on economic stimulus, now it criticises the government for increasing its deficit. The European Commission has noted Malta’s deficit increased due to temporary measures and that the country is still on track towards financial consolidation. The deficit increase was required because the government is responding to the call made in the European Economic Recovery Plan with its aid measures.”
Fenech said government’s stimulus plan was presented in the last budget with a €124 million investment in infrastructural projects such as road building, factories and schools, €58m in human resource investment, €47m in enterprise and €61m for enviromental projects as well as leaving €46m in people’s pockets through tax cuts, tax breaks for women, and energy benefits.

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